Federal marketplace more adept than states at enrolling customers, study finds

By Michelle Andrews, Kaiser Health News

Apr 10, 2015

Despite its rocky launch, the federal health insurance exchange did better than the exchanges run by individual states at both enrolling new people in Obamacare and hanging onto previous enrollees during the 2015 open enrollment period that ended in February, according to a recent analysis.

Enrollment for 2015 on the federal exchange increased by 61 percent over 2014, to 8.8 million. On the state-based exchanges, enrollment increased 12 percent, to 2.8 million, according to the analysis by the consulting firm Avalere Health. In addition, the federal exchange re-enrolled 78 percent of its enrollees from the previous year, while the state-based exchanges re-enrolled 69 percent.

Several factors may have contributed to the disparities in enrollment and retention, says Elizabeth Carpenter, a director in the health reform practice at Avalere, which conducted the analysis based on federal enrollment data released in March for the federal and state-based exchanges.

The many website and other glitches that bedeviled the 2014 launch of healthcare.gov, the federal portal for Obamacare coverage in about three dozen states, may have contributed to its stronger enrollment showing this year, Carpenter says.

“Some folks have pointed to the technological problems with healthcare.gov, saying that there may have been people who didn’t get through the enrollment process last year” because they couldn’t get the website to work, Carpenter says. In 2015, instead of error messages and frozen screens, healthcare.gov functioned smoothly for the most part, even during periods of heavy use.

It may also be that the federal exchange covers more states that have a larger proportion of lower income people, Carpenter says. More than 85 percent of people who bought health insurance on the state and federal marketplaces were eligible for premium tax credits that were available to people with incomes up to 400 percent of the federal poverty level ($46,680 for an individual).

As for retention differences, it’s possible that more people over-reported their income on state-based exchanges for 2014 coverage and were subsequently shifted to the Medicaid program this year. Twenty-eight states have expanded Medicaid to adults with incomes up to 138 percent of the federal poverty level (about $16,100). In those states, if someone applies for a marketplace plan, the exchange will move them into Medicaid if their income falls below that threshold.

Such shifting could make it appear that some states had lost enrollees when instead they just moved to Medicaid. Avalere didn’t incorporate Medicaid eligibility shifts into its analysis.

But it’s not clear why state-based exchanges would experience such shifts to a greater degree than states where the exchange is run by the federal government.

The takeaway? “The numbers underscore that significant growth year over year is not necessarily a given,” Carpenter says. “The question for all exchanges is how to continue to grow over time and attract healthier enrollees.”